Health Care for America Now (HCAN) is pushing a superficially attractive health reform model that has a long record of failure – akin to prescribing a placebo for a serious illness when effective treatment is available. They would offer Americans a new public insurance plan and a menu of private ones, with subsidies for coverage for low income families.

This approach reprises the format of Medicare’s ongoing privatization. Despite promises of strict regulation and a level playing field that would allow the public plan to flourish, private insurers would (as they have done in Medicare) predictably overwhelm regulatory efforts through crafty schemes to selectively recruit profitable, lower-cost patients, and avoid the expensively ill. Like the Medicare Advantage program, originally touted as a market-based strategy to improve Medicare’s efficiency, the HCAN plan would evolve into a multibillion dollar subsidy for private insurers whose massive financial power (amassed largely at government expense) would prove a political roadblock to terminating the failed experiment.

Unfortunately, proposals like HCAN’s that cede a central role to private insurers can only add coverage by adding costs. They promise savings from computerization and chronic disease care management. Yet the Congressional Budget Office has warned that there is little or no evidence for such savings.

The HCAN proposal forgoes most of the $350 billion annually in administrative savings possible under single payer national health insurance (NHI). Administrative waste is a natural byproduct of the private insurance firms that would retain a central role under HCAN’s plan. Private plans’ overhead is 12-fold higher than under NHI; the excess is squandered on marketing, underwriting, utilization reviewers and profits, and for the billions paid to executives. And the multiplicity of insurers envisioned in the plan precludes paying hospitals a global, lump sum budget; such budgets would save additional billions by obviating the need for most hospital billing and much of the internal accounting needed to attribute hospital costs to individual patients and payers.

HCAN’s proposal duplicates key elements of health reforms that have passed (and then failed) in multiple states: Massachusetts in 1988; Oregon in 1989; Tennessee, Minnesota and Vermont in 1992; Washington State in 1993; and Maine in 2003. In each case, rising costs scuttled the reform effort; none had a durable impact on the number of uninsured. The 2006 Massachusetts law, which incorporates many of the features of HCAN’s plan, is already threatened by rising costs, despite offering skimpy coverage and leaving many uninsured. And Massachusetts, with its low rate of uninsurance to begin with, and a large fund devoted to care of the uninsured, offered the optimal conditions for trying such a plan.

HCAN’s proposal tries to avoid a head-on collision with private insurers, but the result is a plan that cannot achieve universal coverage or make care affordable. For physicians, offering a placebo in place of effective treatment is a serious ethical violation. Hence, while we salute the good intentions of the members of the HCAN coalition, we must warn against their proposal.

14 Responses to “A Policy Response to Health Care for America Now”

As proponents of a single-payer system we need to get away, a bit, from the moral arguments and emphasize that all the proposals like HCAN’s and Obama’s are ripping off taxpayers. If the Bill O’Reilly types were at all sincere they would scream:”why should I, the taxpayer, pay for the poorest and sickest and the private insurers cover and collect from the wealthiest? Even if it would cover everyone, which is doubtful, that’s not a model that any business would find attractive so why does our government? ” The argument should be framed in conservative terms, not squishy liberal ones. Some 21st century Ross Perot has to emerge with poster boards that shows what happens to our tax dollars with various systems.

“Never bring a knife to a gunfight” — a famous line, which has its roots in the Old West and urban streets, appears to resonate in the Karl Rove and other right-wing warrior, but not amongst Progressives and single-payer advocates.

If indeed the immorality of the status quo fails to stir the hearts and minds of those requiring further convincing, then the pocketbook elements are a slam dunk. It would require the most creative and resourceful detractors of single-payer to argue the merits of an arrangement, which invites corruption and rewards fraud, waste, and abuse.

The problem is that no one seems to want to paint the full picture and connect all of the dots. So, we remain stuck in 2008 with the same tactical approach to a problem, 90% the facts of which are unknown to the general public.

If PNHP is going to sell Single-Payer, it must provide a winning answer to the age-old unexpressed question on every prospective buyer of intangilbes mind, What’s In It For Me? And if the answer, rife with facts about what he already is paying for and doesn’t know it, is sufficiently activating, a sale can be made.

So, the prospective buyer of single-payer needs to be rendered mad as hell before he makes the purchase.

PNHP et. al. need to determine how to convey the facts to engage outrage and make the sale. But first they must determine if bringing a gun to a gunfight is within their strategic plan.

this seems to have become the default mode for defeating single payer. Pretty much everyone except a few dead-enders gets it that the status quo has become utterly indefensible. So now the mode is to admit that part, while using this sort of faux reform to derail single payer. I think that some of the folks behind it our cynical manipulators, while others are good well intentioned folks who have allowed themselves to be worked by the argument that single payer is “not politically feasible”. Ironically, if all the people who say that would put their energy into real activism for single payer it would instantly become politically feasible.
For more on this see my dailykos post here:http://www.dailykos.com/story/2008/7/9/17516/76067/202/548988

Having sat in the packed House Judiciary room in today’s HR 676 coalition briefing in Washington DC, it is worth noting that today’s speaker was Celinda Lake. She is a well respected pollster and has polled extensively around health care. Space does not permit me to detail all her comments and that of the many single payer advocates in the room. However, her polling data clearly influenced how Jacob Hacker formulated his proposal for health care reform, which in turn is the basis for Obama’s, Clinton’s and Edward’s proposal. It is furthermore, the basis for the Health Care for America proposal.

The problem with health care reform by polling data is that it sounds great, but as Dr. Himmelstein notes, it doesn’t get us to what Americans want – which incidentally was Celinda Lake’s biggest point – guaranteed, affordable health care for all Americans.

But the urgency is pretty clear and there are a lot of groups meeting in Washington around health care all vying to be the model that either Obama or (hopefully not, McCain) will present in the first year of their Administration.

There isn’t any “government expense”. It’s expense to the people who pay taxes, most of them middle class, who are getting screwed into the ground by this massive transfer of money from their pockets to those of the insurance companies.

I’d like to see change, but I think there will be collapse before any real change will be allowed to occur. Perhaps Medecins sans Frontieres can be persuaded to send medical missions to the US. The established system will continue until financial collapse ensues, most probably brought on by what is known as “Peak Oil” and the financial crunch brought on by the retirement of the Baby Boomers and their mounting medical costs.

The “medical care as a business” model is an utter failure; “Health care” and “Wellness” are about to price themselves right out of the market. The “medical profession” needs to become just that: a profession, in the old sense of the word. Perhaps more akin to a “calling” or a “vocation”…

NEW YORK (Fortune) — Here’s a scary, and relevant, question to
ponder as the housing market continues to slide: What would it take
for the government to step in and help Fannie Mae and Freddie Mac,
and how would a rescue affect you, the taxpayer?

A Lehman analyst’s note on Monday sent shares of both companies
plunging. Though they’ve recovered some, the fall, and Fed Chairman
Ben Bernanke’s downbeat outlook for housing issued Tuesday, is
forcing investors to consider what would happen if a bailout is
needed.

Fannie Mae and Freddie Mac are government sponsored enterprises that
help the mortgage market function by purchasing pools of loans and
packaging them into securities. If one or both couldn’t function, the
result would be chaos.

At the end of last year, Fannie alone had packaged and guaranteed
about $2.8 trillion worth of mortgages, approximately 23% of all
outstanding US mortgage debt. And these securities are highly rated
and sold to investors all over the world.

“If Fannie or Freddie failed, it would be far worse than the fall of
[investment bank] Bear Stearns,” says Sean Egan, head of credit
ratings firm Egan Jones. “It could throw the economy into depression
or something close to it.”

Clearly, investors remain concerned. Credit default swaps – a kind of
insurance against the possibility of Fannie (FNM, Fortune 500) and
Freddie (FRE, Fortune 500) defaulting on their corporate bonds, are
at their most expensive levels in 14 weeks; both companies are
expected to report steep losses for the second quarter; and their
main business, mortgage securitization, is under pressure as home
price values decline and foreclosure numbers rise.

“The major issue is that these are very leveraged financial
institutions, leveraged much more than any other bank, and they have
lots of mortgage assets. As real estate values decline every day, the
value of [the mortgages that it bundles, guarantees, and sells] are
called into question,” says Dalton Investments co-founder Steve
Persky, who has been focused on distressed mortgage assets.

The possibility of government aid looms because it’s hard to see how
the private market can help the companies. Their stock market values
have dropped so low that it would be difficult for them to raise
money. For example, Egan estimates that Freddie alone will need to
raise $7 billion over the next two quarters due to writedowns and
losses. But the company’s market capitalization – the number of
outstanding shares times the share price stands at $8.7 billion.

“An investment banker would be hard pressed to raise an amount of
money nearly equal to the value of the entire company,” Egan says.

What’s more, both companies have already raised a total of $13
billion by issuing preferred stock at the end of 2007; and they
reduced their dividend payments to conserve cash.

The disaster scenarios
The Federal Reserve and the Treasury have taken great pains to point
out that the government is not obligated to bail out either Fannie or
Freddie if they face insolvency. It’s debatable where the legal
obligations lie, but as a practical matter, the government can’t let
these institutions fail because they are being counted up on to help
fix the mortgage mess. If Fannie and Freddie were unable to buy and
back loans, banks would stop originating them and the pool of
homebuyers would shrink, causing home prices to fall even further.

“If the government believes the companies serve an essential role in
the market, which they do, they cannot let them fail,” says Joseph
Mason, an economics professor with the University of Louisiana who
focuses on the mortgage markets.

So what would force the Treasury and Fed to step in?

Fannie and Freddie are among the most highly-leveraged companies
around, meaning the amount of capital they have on hand is nowhere
close to the level of assets they control.

Fannie and Freddie must constantly borrow money in order to operate;
if for any reason borrowing costs rose sharply they would not be able
to make good on their guarantees or even fund their day to day
operations. This is when the government would feel intense pressure
to step in and, at the very least, pay contracts in a timely manner.

In an April report, Standard & Poor’s said an Armageddon scenario
whereby Fannie and Freddie are insolvent is unlikely, but that the
mere possibility of failure at either is a greater threat to the
economy than the actual collapse of any investment bank.

The bailout scenarios
So what might it look like if the government had to lend a hand?
Outright nationalization is an unlikely option given that neither the
current administration nor the presidential candidates could afford
to support such a move in an election year.

More likely, the Treasury Department or the Federal Reserve would
come in and provide a liquidity backstop, in the form of a loan or
guarantee to bondholders that they will be paid. Fannie and Freddie
could even do a preferred stock deal with the government, much like
the deal forged by Citigroup with the Abu Dhabi Investment Authority,
says Egan.

That would allow give officials the ability to argue that they
weren’t bailing out the companies, but rather making an investment
that would pay off in the long run.

…

“But [a rescue] would be a political situation, so it would be
messy,” says Mason. “Fannie and Freddie would fight against having
officers replaced. They would want to keep the dividend.”

The doomsday scenario could cost taxpayers more than $1 trillion,
says the S&P report. The report went so far as to say that a
government bailout of Fannie or Freddie could force the agency to
lower its rating on the creditworthiness of the United States.

It never ceases to amaze me, the amount of energy that can go into a project just to avoid doing the right thing. The best, simplest, least costly, most effective thing we could do is expand what has been working so well for years, Medicare. You get sick, you get care, and the caregiver gets paid. Nothing could be simpler.

But follow the money and you’ll find why the politicians don’t like it a bit, because they get their re-election money from insurance interests.

I fully support single-payer health care as the most effective route to successful reform, and I believe that the truth of this proposition has been demonstrated in other first-world nations.

But here is what I don’t understand about the situation in the U.S.: The health insurance companies are so wealthy and they have so many lobbyists in Washington. How will be able to pass legislation that simply does away with their business? The insurance lobbyists would be all over the Congress, if such legislation began to move forward.

It seems unlikely that we will be able to generate enough public support for single payer. If any proposal becomes likely, these companies will fill the airwaves with ads against it that generate widespread public doubts and opposition.

What can be an effective strategy to achieve single-payer health care that has a reasonable chance to succeed?

Bob Haiducek writes ” I studied the HCA proposal earlier this year and provided the side-by-side comparison of its features to that of non-profit single-payer national health insurance. … You will see information indicates strongly that the complexity and inefficiency will increase … causing our individual costs to for-profit companies to increase and our taxes to increase … putting a further burden on individuals, businesses, jobs, and the U.S. economy. WHO WOULD WANT THIS RESULT?”

The operative part of this is “causing our individual costs to for-profit companies to increase” … which from the standpoint of the for-profit companies is to cause their revenues and hence profits to increase. If you look at “administrative costs” as a profit center/profit generator, you’ll see that increased administrative costs for people dealing with insurance companies are a disincentive to pursuing claims. The less claims pursued, the less payout the insurance companies have to make, hence an increase in the bottom line. The prime mover behind this is the strong incentive for private insurance companies to continue to have strong earnings reports each quarter. With a falling stock market, given the fact that the insurance companies invest their premiums somewhere, the earnings growth has to come from somewhere else… which is the payout ratio.

Private health insurers have no, repeat no, duty towards their policyholders other than those stated in the contracts for coverage, and even here, efficient breach of contract is the name of the game (when the costs to sue the company for breach are greater than the amount of recovery). Private health insurers have only a duty towards their shareholders to increase earnings, and are shielded by the business judgment rule in pursuit of that earnings growth.

Here’s an effective strategy, Richard Kapit. It involves Americans knowing the facts and having thousands of Americans in each U.S. Congressional Districts communicating with their U.S. Representative for that district:

#1 Educate people (I’m working on what has a chance of being a significant contribution to that, and would appreciate people providing reviews and feedback — contact me at bob@99oh9.org). — pardon the lack of a link to the completed work, but I do have extensive information here in the meantime …http://www.99oh9.org/pages/Single-Payer_Education

I was most impressed with this blog. Speaking as a radical social worker, I can say that you can do absolutely anything you want with clients, agencies, etc. as long as it doesn’t actually solve the problem. Clients are made to jump through so many hoops that they never move beyond the reason why they came for help. This allows the agency to conserve its bottom line and appear financially healthy. It’s like taking steps toward a wall and dividing the steps by half each time. You never get to the wall.

The other reason why we are not actually allowed to solve the problem is that the solution involves a redistribution of resources. That is anathema to policy makers except a very few like Dennis Kucinich. Even if we don’t call it “redistribution of resources” politicians and the public alike sense what this is, and have a knee-jerk reaction against it, perhaps without even knowing why.

As an individual growing up in the south, there is also a knee-jerk reaction against insuring individuals who are black or brown, etc. because people with means do not understand why these people are often poor since they tend not to know any of them personallly and believe the “history” they learned in school, which is why reparations is a dirty word

When several healthcare plans are considered by the Legislature (Colorado’s last session, for example), the most rational plan is the fastest plan that will fail. If any of the proposals are accepted/passed, it will be the one most similar to the system we have, so the Legislature can inform the public that they did “something” to reform healthcare. This in spite of an overwhelmingly positive analysis by the Lewin Group compared to the other Colorado proposals.

I want to know who is financing this 40 million dollar media campaign for Health Care for America Now. The insurance companies?
In the same vein. I suspect the reason that Obama’s health care proposal is so pathetic was that is was designed by the advisor that was bounced off his VP selection committee. The same guy that sat on the compensation committee for United Healthcare a while back that approved a 1.4 billion dollar stock option give away to the CEO. Too bad they back dated it and the poor man only walked away with 618 million.
We need to find a way to round up $40 million to tell our story.
Personally, I think single payer, universal care is the only way that the baby boomers are going to be able to save Medicare.

[…] problem with a public-private hybrid system, said Ana Malinow, associate professor of pediatrics at Baylor University and a pediatrician at Ben […]

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Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.